The Australian Dollar strengthens as a US-Iran peace deal boosts risk sentiment ahead of the RBA’s interest rate decision.
The AUD/USD pair climbed to 0.7075 in early Asian trading Monday, driven by a ceasefire agreement between the US and Iran ending nearly four months of conflict. The deal, confirmed by Iran’s National Security Council, includes an immediate end to military operations and the reopening of the Strait of Hormuz within 30 days.
Markets had anticipated the Reserve Bank of Australia (RBA) would hold interest rates steady at its Tuesday meeting, with traders reducing bets on further tightening. The RBA’s decision follows a period of elevated rates, though Governor Michele Bullock’s guidance remains closely watched.
The risk-on sentiment supported the Australian Dollar, a commodity-linked currency, as geopolitical tensions eased. The US and Iran also agreed to lift maritime blockades, further reducing supply chain disruptions in key shipping lanes.